12/19/2016

BurdenedwithIndiranomics|TheDailyStar

Burdened with Indiranomics

The Modi government shows a fascination for rejecting everything Nehru stood for, while embracing his
daughter's political economy.

Indian people queue outside a bank as they wait to deposit and exchange 500 and 1,000 rupee
notes in Amritsar on November 13, 2016. Photo: AFP

Shekhar Gupta

The most fascinating insight notebandi provides is to the Narendra

Modigovernment's approach to exercise of state power, political and economic
ideology. It is an interesting point also to make in the week when India is
observing the 45th anniversary of the victory in the 1971 war, the high point of
Indira Gandhi's leadership. Here is a proposition then: the Modi and the broadly
shared Rashtriya Swayamsevak Sangh (RSS) worldview is built on a strong
repudiation of Jawaharlal Nehru and all he stood for. But an admiration,
desperation, to replicate the method, style and politics especially political
economy of Indira Gandhi.
Let's begin with the government's favourite economist, Professor Jagdish
Bhagwati. In his belated defence of notebandi last week, he reminded us that he
http://www.thedailystar.net/perspective/burdenedindiranomics1331803

1/4

12/19/2016

BurdenedwithIndiranomics|TheDailyStar

had also taught Indian Constitution at Columbia University in the US for many
years and could say for sure there was nothing illegal about the government
denying the citizen rights over its legal tender. One of the earliest constitutional
amendments, he pointed out, had empowered the state to seize citizens' property
for social purpose, of course after paying a compensation. Or, he said, abolition
of privy purses would have been struck down by the Supreme Court.

John Maynard Keynes has been a much quoted man lately. It is

time to pull out one of his less famous lines: The difficulty
lies not so much in developing new ideas as in escaping from
old ones.

We are not asking what compensation was given to the loser princes because that
will be neither popular, nor relevant to the issue at hand, which is, that one
reputed to be our most committed, pro-reform economist, uses a socialist
amendment that bred some of the worst kind of povertarianism under the
Congress, especially Indira Gandhi, in defence of another use of brute state power
forcing the country and its economy in disarray. What kind of pro-reform, less
government-more governance leadership displays such faith in the ability and
intentions of the state, justify such sweeping use of its powers, or a statemandated restructuring of monetary system so massive it would be the
equivalent of eight on the Richter scale. A planned change so huge, even PC
Mahalanobis, founder of the Indian Statistical Institute and member of the first
Planning Commission, would not have imagined possible in the days of Sovietstyle planned economy.
This is not personal, and this isn't about Professor Bhagwati either. We know the
history, and human chemistry, enough to understand the need for a default
position in counter once one of the two greats, Professor Bhagwati and Amartya
Sen, has spoken on an issue. The key point is how, from the prime minister who
came to power on the promise of economic reform and growth with a track
record in Gujarat and to his most admired global economist, we are now seeing
an admiration for Indira Gandhi's style, methods, even her disastrous economics.
Put it another way: How does the prime minister whose first reformist act was to
abolish the Planning Commission, now railroad the most centralised
transformation in the national economy since bank nationalisation?
No official commemoration of the 1971 victory has given Indira Gandhi much
mention through this week, which is understandable. But if you explore
the Narendra Modi politics, you can find parallels with her style, and also a
grudging admiration. The ability to take institutions in your stride, as if these
http://www.thedailystar.net/perspective/burdenedindiranomics1331803

2/4

12/19/2016

BurdenedwithIndiranomics|TheDailyStar

were no more than minor irritants. Passing a most important income tax act
amendment that restores the discretionary power of the taxman at the lowest
level and thereby can potentially damage liberalisation of 25 years, without a line
in discussion, by a voice vote (commotion, or halla as we prefer to say in our
politics) in the Lok Sabha. Or returning more than half of the high court judges'
appointments proposed by the Supreme Court Collegium. Using Treasury benches
to stall Parliament after cursing the Opposition for having done just that so far.
Or reducing the stature of the governor of the Reserve Bank of India to the
equivalent of an anonymous joint secretary in the Ministry of Finance, where its
civil servants hold forth on daily changes in currency policy and where a junior
finance minister announces that the government is going to cut tax and
interest rates in next Budget.
Most importantly, it reflects also in the view expressed by more than one
powerful supporter and ideologue of this government that nothing works in India
with persuasion. The government has to enforce change, if it needs to use brute
force to that end, so be it. There is wariness with procedure, institutions,
whether these are apex committees of the Cabinet or the highest judiciary,
irritation with paperwork (barring currency notifications which change at the
pace of a T-20 scoreboard) and a total rejection of the system. This is precisely
what Mrs. Gandhi did to the system she inherited from her more proper father
and his unfortunately short-lived successor Lal Bahadur Shastri.
Spurred perhaps by the setbacks of the 1967 elections, she embarked on a project
of dismantling that system, reducing her Cabinet and party leadership into
yes-men, undermining other institutions, demanding socially committed
judiciary and bureaucracy, fuelling a new sense of hyper-nationalism, anti-West
xenophobia, swadeshi, import-substitution pride and most importantly, extreme,
and equally insincere socialism. The RSS has never really questioned most of
these in principle as much as they detested Nehru's philosophy and policies.
Their admiration for Indira Gandhi also came from the acknowledgement that in
her tenure, especially 1969-77, she dismantled much of the moral, liberal
democratic edifice Nehru had built. Who better to destroy Nehru's legacy than
his own daughter. Mrs. Gandhi came up to those expectations fully by suspending
citizens' rights and putting her opponents in jail, something Nehru would never
have dreamed of. The basic Modi-RSS proposition is also a tough government,
willing to use the danda where needed and not get distracted by pestilence
like media, civil society or overzealous busybodies like experts, technocrats,
judges.
Whether now, or in the pre-Modi era, the BJP-RSS criticism of Indira Gandhi has
more or less been limited to her political actions, not her economics. Even when
the Janata Party came to power, defeating her in 1977, most of her illiberal
http://www.thedailystar.net/perspective/burdenedindiranomics1331803

3/4

12/19/2016

BurdenedwithIndiranomics|TheDailyStar

political laws and actions were set aside, but economic ones were retained.
Nobody wanted to question her fake socialist ideas. In the second half of his
tenure, Atal Bihari Vajpayee made a beginning, privatising some key public sector
companies. But it ran into immediate opposition from the RSS, as did his wary
openings to a globalised economy and a post-Cold War political order. Brajesh
Mishra, who fronted both of these policies, was painted as foreign (American)inspired fifth columnist in his core group.
With the rise of Narendra Modi, the expectation was a clearer repudiation of
Indiranomics, particularly given his reputation in Gujarat. At half-way mark, the
conclusion has to be that he has confined his ideas of fundamental change to
Nehru's woolly-headed ideas of liberalism (the word liberal is now a pejorative),
pacifism and hard secularism. All of Indira Gandhi's bad economic ideas are being
strengthened, from nationalised banks to anti-poverty, handout yojanas. The big,
suspicious state is back, with its heavy hand, raiding taxmen, rampaging
policemen, the CCTV camera. Not only has the Modi government refused to
privatise any old public sector yet, it has carried out the first nationalisation in a
long time (several tea gardens in Assam on the eve of Assembly elections earlier
this year) and announced the revival of nearly two dozen fertiliser plants.
The Indira-esque idea of Big Government comes with its own baggage. It includes
an impatience with institutional checks and balances, diminishing trust in the
individual citizen and exaggerated faith in the civil servant. John Maynard Keynes
has been a much quoted man lately. It is time to pull out one of his less famous
lines: The difficulty lies not so much in developing new ideas as in escaping
from old ones. We can say the really bad old ones, like Indira Gandhi's style of
politics, governance and, most importantly, economics.
The writer is an Indian journalist. Twitter: @ShekharGupta

Copyright:

http://www.thedailystar.net/perspective/burdenedindiranomics1331803

4/4